March Housing Starts Disappoint

March new housing construction wasn't able to keep up with February's robust pace. Weather was likely a factor since February was mild, while March included some harsh winter storms.

Housing starts fell 6.8% in March over February to a seasonally adjusted annual rate of 1.215 million, according to the Commerce Department’s Tuesday report. Consensus among economists was for 1.25 million starts.

In February, housing starts jumped by 5% to 1.303 million, a number revised higher in the March report. Year-over-year, housing starts climbed 6% in March.

Permits rose by 3.6% from February's level. That’s 17% above the level a year ago. However, the gains were all in multi-family units. Single family permits fell by 1.1% from February when they were at the highest level since 2007.

Thomas Simons of Jefferies believes the overall strength in permits is a better indicator of housing market. He writes to clients:

Permits are not as heavily affected by weather as starts are by their nature, since they only require paperwork rather than shovels in the ground. The strength in permits is a better representation of the strength in the housing market and the continued demand for new home supply.

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